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Bajaj Housing Finance, established in 2008, is a non-deposit-taking Housing Finance Company (HFC) registered with the National Housing Bank (NHB) since 2015. The company began its mortgage lending operations in Fiscal 2018 and is part of the Bajaj Group, a diversified business conglomerate founded in 1926, with interests spanning multiple sectors. Bajaj Housing Finance offers a range of financial solutions tailored to both individuals and corporate clients for home and commercial space purchases and renovations. Its mortgage product portfolio includes home loans, loans against property (LAP), lease rental discounting, and developer financing. As of March 31, 2024, the company served 308,693 active customers, 81.7% of whom were home loan customers. It operates through a network of 215 branches across 174 locations in 20 states and three union territories, supported by six centralized hubs for retail underwriting and seven centralized hubs for loan processing.

Ranked second in size, rapidly expanding, highly diversified, and exceptionally profitable:

Bajaj Housing Finance Ltd. boasts a distinguished heritage as part of the renowned Bajaj Group, a major Indian conglomerate with wide-ranging business interests. As a wholly-owned subsidiary of Bajaj Finance Limited, the company leverages its parent's extensive experience in financial services. With a strong track record, Bajaj Housing Finance has grown to become the secondlargest housing finance company (HFC) in India by AUM, demonstrating resilience and steady growth over its seven-year history despite industry challenges such as the NBFC crisis and the impact of COVID-19. As of June 2024, its total assets under management reached 97,071.33 crore, reflecting significant yearon-year growth from 74,124.26 crore. Falling under the Reserve Bank of India's "Upper-layer" NBFC category, the company is set to benefit from an upcoming IPO listing by September 2025, further enhancing its public presence and brand recognition.

Robust safeguards for asset quality:

BHFL maintains strong asset quality through a robust in-house four-tier collections system, including tele-calling, field collection, legal recovery, and settlements. As of March 31, 2024, the 356- member team achieved a 99.5% collection efficiency, with 30+ dpd at just 60 bps. A well-defined credit evaluation and underwriting process ensures risk performance stays within thresholds. The focus on prime home loans, high credit scores, safer properties, and low origination LTVs of 55% for LAP loans further strengthens the company's asset quality.

Outlook & Valuation:

The company is valued at a 3.2x P/BV multiple on an annualized basis for 1QFY25, considering the upper price band and postissue capital. Substantial value could be added over the next 12- 15 months, driven by expected AUM and earnings growth of 25- 30% and a RoE of 14-15% in the coming years. We recommend SUBSCRIBE to the issue based on healthy balance sheet and high return ratios.BHFL's key strengths lie in its strong growth execution, effective risk management, and operational efficiencies.

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SEBI Regn. No.: INM00001274